If a Price Ceiling on a Monopolist Results in NO

question 110

Multiple Choice

If a price ceiling on a monopolist results in NO shortage:

• A) the full economic price is lower than the one set by the ceiling.
• B) rent seeking must be effective.
• C) the firm is on the verge of leaving the market.
• D) the firm must be making zero economic profits.

Comprehend the implications of price discrimination in service industries and why it is more prevalent there.

Understand regulatory approaches to monopolies and the concept of socially optimal pricing.

Evaluate the ethical considerations and consumer perceptions related to price discrimination practices.

Understand the concepts of socially optimal pricing and fair-return pricing in the context of regulating monopolies.

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Definitions:

Returns to Scale

The change in output as a result of proportionately changing all inputs in the production process.

Student Enrollment

The process through which students register or enter into a course of study at educational institutions.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Average Total Cost

The total cost of production divided by the total quantity of output, representing the cost per unit of output.